- Binance’s market share fell 1.4% to 41.6%, the largest among centralized exchanges.
- Derivatives market share fell for the first time in four months.
Fueled by institutional interest in digital assets, the broader crypto market experienced a robust recovery in June. The bullish rally, which started after TradFi giant BlackRock’s request for a spot of Bitcoin [BTC] Exchange-Traded Fund (ETF), resulted in annual highs of major assets.
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King Coin BTC broke the stubborn $31,000 barrier for the first time since May 2022 and is up nearly 20% since the announcement of the spot ETF. At the same time, the total crypto market cap is up 14% to $1.17 trillion at the time of writing, per CoinMarketCap.
Source: CoinMarketCap
As expected, the bull run boosted trading activity on major centralized exchanges (CEXs), breaking a two-month losing streak.
Buzz back on exchanges
The price action of the previous months disappointed both the bullish and bearish forces of the market. This resulted in trading volume on the exchange falling to the lowest levels in several years.
However, the legal action taken by US regulators against giants Binance and Coinbase and the spate of spot ETF applications brought much-needed volatility to the markets.
According to a report According to digital asset data provider CCData, spot trading volume on CEXs rose 16.4% to $575 billion in June, the first increase in three months. While Top-Tier volumes were up 12.5%, Lower-Tier exchanges saw a 26.4% increase from the previous month in May.
For the uninitiated, CCData’s Exchange Benchmark categorizes the digital asset exchange industry as “Top-Tier” or “Lower-Tier” based on the level of risk involved.
Source: CCData
The relatively lower growth rate for Top-tier exchanges may have been due to the legal challenges, as highlighted earlier. Binance, US branch Binance.US and Coinbase all saw their market share fall in June. Binance, the world’s largest exchange by spot volume, was the biggest loser among CEXs. Market share fell by 1.4% to 41.6%.
The curious case of Coinbase
On the other hand, Coinbase shares fell the least, falling just 0.08% to 5.36% in June. The report stated that increased activity from US-based institutional investors boosted volumes on America’s largest crypto trading platform.
Source: CCData
This was further illustrated by the growing share of BTC trading volume on the platform. As of July 4, Coinbase accounted for more than 60% of the BTC volumes of the exchanges operating in the US market, up from 45% in April. According to the report, it would improve its stock in July for the third month in a row.
In addition, BTC supply on Coinbase skyrocketed following the jump in the asset’s price, according to CryptoQuant. Since Coinbase is primarily used in the US market, it could be inferred that the overall spot trading activity was driven by US institutional investors.
Source: CryptoQuant
Derivatives market is losing market share
The dominance of spot trading activity affected the share of the derivatives market. While derivatives volumes rose 13.6% to $2.13 trillion in June, overall dominance dropped to 78.7%. This was a noticeable drop from the all-time highs of 80% in May.
Interestingly, this was the first decline in derivatives market share in four months, indicating spot accumulation of crypto assets.
It should be noted that spot ETFs, unlike futures ETFs, will be backed by real Bitcoin, and the price of one stock on the exchange will react to the spot price of BTC, similar to holding a BTC.
Source: CCData
Exchange supply, including Bitcoin, at multi-year lows
While crypto volumes clearly strengthened in June, the supply of top digital assets on CEXs continued to decline. According to Glassnode, the percentage supply of BTC on exchanges fell to a five-year low of 11.6% as of July 6.
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The second largest digital asset by market cap Ethereum [ETH] showed similar behavior, albeit with a stronger decline. At the time of writing, only about 12.8% of the total circulating supply of ETH was available to trade and buy, the lowest in nearly six years.
Source: Glassnode
However, according to Binance CEO Changpeng Zhao (CZ), things could change soon. In a recent “Ask me anything” session on Twitter, the crypto tsar predicted a bull run for Bitcoin in the next year and a half. In addition, he predicted that crypto exchanges should brace themselves for increased trading volumes.